Thursday, May 23, 2024

ECONOMY | 04-03-2022 23:32

IMF bill reaches Argentina's Congress to a backdrop of uncertainty

Bill outlining agreement between Argentina and the IMF sent to lower house; Doubts persist over support from Kirchnerite lawmakers in ruling coalition; Opposition says it will wait to hear presentation from Guzmán.

After delays and following fresh changes to the text, the government finally sent its draft agreement with the International Monetary Fund (IMF) to the Chamber of Deputies on Friday. Debate on the bill, which contains four articles, will begin on Monday, congressional sources confirmed. 

Having trailed the bill’s arrival the previous day heavily to local outlets, officials revealed that its arrival to the legislature on Friday had been delayed further by a tug of war, with the opposition seeking to separate the articles approving the debt financing deal from two annexes detailing economic measures the government is committed to.

According to sources cited by Noticias Argentinas, the opposition wanted to give its lawmakers the opportunity to vote in favour of the agreement without approving the government’s economic plans, leaving the path of abstention open for those articles.

The text of the bill that finally entered the Chamber of Deputies just after midday has four articles, with the first explicitly authorising the Executive branch to negotiate. The second includes the annexes detailing economic plans and the third and fourth are “of form,” sources told NA.

Local outlets spent Friday reporting that lawmakers in the opposition Juntos por el Cambio coalition intend to wait to hear a presentation from Economy Minister Martín Guzmán about the deal before defining their position on the accord. To do otherwise would be “premature,” lawmakers said.

"In Juntos por el Cambio we have always said that Congress is only authorised to vote on financing, economic programmes are the power of the Executive Branch and Parliament has no reason to give its opinion or endorse them," members of the opposition’s parliamentary group told the Noticias Argentinas news agency.

Guzmán’s presentation is expected to take place on Wednesday. He will also meet with ruling coalition lawmakers on Sunday in the capital to discuss the deal. 


Doubts and tensions

The run-up to the start of the legislative debate is already straining relations between the various factions of the ruling coalition. While Guzmán, President Alberto Fernández and Lower House Speaker Sergio Massa, are trying hard to build bridges with the opposition and win them over, hard-line Kirchnerites lawmakers within Frente de Todos are hardening their positions, leaving the government in the dark about how much support it actually has among its own lawmakers.

On Thursday afternoon, hours after the government confirmed that it had reached an agreement with the Fund, the La Cámpora youth organisation published a fiercely critical video of the IMF on social networks. Although it featured no direct references to the negotiations, the group – which is led by ex-Frente de Todos caucus chief Máximo Kirchner, who resigned his post in opposition to the deal  – has warned that any agreement with the IMF will deliver painful consequences for the people and require submission to periodic reviews from the multilateral lender.

Adding to the complications, a sector of Kirchnerite militants are planning to demonstrate outside Congress next Wednesday (March 9) as the bill is debated to express their rejection of it. A number of union leaders have already said they will join the rally, though the influential CGT umbrella union will not participate.

Set against this backdrop, the government’s initial challenge is to ensure the IMF bill wins sufficient approval in the lower house. The Casa Rosada is unsure how the 30 or so deputies linked to Kirchnerism will vote, even now.


‘The only possible way’

Speaking in a radio interview on Friday, Economy Minister Martín Guzmán revealed that Argentina would receive an almost immediate disbursement of seven billion in IMF SDRs (Special Drawing Rights), or around US$9.8 billion at today’s exchange rate, should the lender’s Executive Board approve the deal.

Describing the agreement as “anomalous" when compared to other IMF deals with nations, the minister said that the deal agreed by the Fernández administration is “the only possible way" to meet the payment of the debt. 

Guzmán said it was integral that Congress approve the deal, but acknowledged that “nobody in our [political] force likes the IMF being in Argentina." 

"We began to govern with a debt of US$44.5 billion and we had no reserves available to pay it. So the only way was to reach an agreement that would allow the IMF to send us the dollars with which to refinance the debt taken on by the previous government, and that is what we did," he explained.

Guzmán indicated that "reducing inflation is the main objective of macroeconomic policy" and considered that "accumulating reserves is fundamental" for this, since "the first thing we need is to calm expectations and, if there is a shortage of international reserves, there is no way to achieve this."

Regarding the resegmentation of energy subsidies, he assured that "nobody is going to experience increases greater than those of salaries." He explained that "the key word is 'segments' – a scheme is being proposed where those who are in a situation of greater vulnerability and who today receive the social tariff will have an annual increase well below the variation of average salaries.”



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